Monday, 20 February 2017
Trading Trump’s tweets explained
Posted by Fort Financial Services at 01:07
Haven’t heard yet? Well… Like it or not, Donald Trump has officially become the new President of the United States. And he’s already running the White House for a month, so in case you’re still digesting the inauguration, time to move on because there is plenty of work to do. If Trump has been famous for something, it’s for his hair. Just kidding… For his genius social media presence. That’s right, he has built a tremendous popularity in Twitter and now that he’s in charge, each tweet has huge power over media headlines, individual opinions and… stocks! But how to interpret those 140-character messages and turn them into profits? Well, it seems that Trump is all about extreme positions, forget about the 50 shades of Obama. Trump is about black or white, good or bad. So basically, that’s how you should read his tweets.
The Bullish Trump
- Deregulation: Less regulation means less trouble for business owners. While some argue regulation is necessary to prevent bad practices to take over and create a new crisis, Trump thinks regulation is only positive in little measure. In his opinion, deregulation translates into faster industrial execution, capabilities and job creating.
- Infrastructure: When the government spends money, it does it BIG. Trump has a few infrastructure projects in mind, including the construction of the so-called “Trump Wall” in the US-Mexico border or the renewal of different roads. All those bills will eventually fall into the hands of construction, logistic, manufacturing companies and so on.
- Tax Reform: Lowering taxes for business and individuals it’s a great way to promote inflation. Why? Instead of paying taxes, a consumer can use that money and spend it on something he or she wants. In that scenario, people inject more money into the system. Business reports higher earnings and stock markets move upwards.
The Bearish Trump
- International Relations: Keeping things steady in the foreign arena has never been Trump’s intention. Political tension between the US and China or Iran could eventually weigh on the administration and stocks related to it.
- Travel Ban: It’s not so much about the travel ban itself but rather about how local communities take it. When the ban was announced, it created a wave of protests across the United States. And Wall Street doesn’t like protests, as they are a symbol of instability and uncertainty.
- American-made: Making your own products it’s definitely a good thing. No questions here. However, if you are threatening companies to bring their production to the US, it might not play out very well. BMW said 70,000 employees is perfectly OK for them right now and that if the US wants to sell more American-made cars, they simply need to produce better cars. Got the idea?
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